China restricts bitcoin transactions

On Thursday, People’s Bank of China (PBOC) and four other official agencies jointly issued a statement on bitcoins, a digital currency that has recently gained wide popularity in China and soared in price. Bitcoin is the first “decentralized peer to peer payment network with no central authority or middleman.” The statement said that the government restricted financial institutions from bitcoin transactions, voicing concerns about its risks, as well as the potential for illegal transactions such as money laundering. However, the government is not going to curtail the use of bitcoin as a kind of “commodity trading activity on the Internet” by individuals “provided they assume the risks themselves.” Officials in Beijing also expressed the need to protect the status of the renminbi as the statutory currency. (New York Times, Reuters, Dec. 5, 2013)

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